What is Sky (SKY)?

Deep Dive

1. Purpose & Value Proposition

Sky Protocol aims to provide accessible, user-controlled DeFi tools. Its core offering includes:
- USDS Stablecoin: A decentralized, USD-pegged asset (upgraded from DAI) used for savings and rewards.
- Sky Savings Rate (SSR): Users earn USDS rewards by depositing funds into non-custodial smart contracts.
- Sky Token Rewards: USDS holders earn governance tokens (like SPK from Spark) by supporting ecosystem projects.

2. Technology & Architecture

Built on Ethereum, Sky Protocol integrates:
- Staking Engine: Replaced MakerDAO’s Seal Engine, allowing SKY holders to stake tokens for rewards (up to 15.7% APY) and delegate voting rights.
- SkyLink: Bridges Ethereum with Layer 2 networks (e.g., Arbitrum, Optimism) to reduce fees and improve transaction speed.
- Modular Design: Independent sub-projects (“Sky Stars”) like Spark (lending) and Grove (institutional credit) drive innovation.

3. Tokenomics & Governance

• SKY Supply: Fixed at 24,000 SKY per 1 MKR after rebranding, with ongoing buybacks (1.11B SKY burned as of August 2025).
• Governance: SKY holders vote on protocol upgrades, risk parameters, and treasury allocations via the Sky Atlas—a ruleset refined through decentralized proposals.

Conclusion

Sky Protocol is a community-governed DeFi ecosystem built around the USDS stablecoin and SKY token, emphasizing scalability, user control, and institutional-grade financial tools. Its evolution from MakerDAO introduces streamlined governance and a modular structure via Sky Stars.

What challenges might arise as Sky balances decentralization with the need to onboard institutional partners like Grove?